Financial Performance Overview

FY 2025-26 Performance

  • Sales growth of 11% year-over-year, outperforming passenger vehicle market growth of 9%
  • Passenger vehicle market achieved sales of 5.54 million units compared to 5.07 million units in FY 2024-25
  • EBITDA margin for full year declined to 7.5% from 7.6% in previous year
  • Second half EBITDA margin improved to 8.48% compared to 7.71% in same period previous year

Margin Analysis

Fixed Cost Control:

  • Employee cost as percentage of sales declined by 0.18%
  • Administration cost as percentage of sales declined by 0.1%
  • Total fixed cost reduction of 0.28% as percentage of sales

Variable Cost Increase:

  • Overall variable cost increased by 0.38% as percentage of sales
  • Material cost increased by 0.18%
  • Manufacturing cost increased by 0.1%
  • Selling cost increased by 0.1%

Key Factors Impacting Margins

Positive Factors (0.38% improvement):

  • Export sales increased by 20% from ₹551 million to ₹664 million (0.15% margin benefit)
  • Resolution of Red Sea freight issues and reduced testing charges
  • Settlement of provisions from previous year
  • Warranty cost reduced by approximately half

Negative Factors (0.56% impact):

  • Product mix change costing ₹88 million (0.33% impact)
  • 33% decline in sales to Honda
  • 16% decline in sales to Renault Nissan for export models
  • 4% decline in sales to Toyota
  • Increased sales to Maruti Suzuki for models with lower margins (Alto, Jimny, Baleno, Ertiga, Brezza)
  • Foreign exchange accounting impact of ₹62 million (0.23% impact)
  • U.S. reciprocal tariff and penalty cost of ₹63 million (0.24% impact)
  • Power tariff increases and higher power utilization for new production lines

Customer-wise Sales Breakdown

  • Maruti Suzuki: Increased from 56% to 60% of total sales
  • Toyota: Declined from 12% to 10% of total sales
  • Honda: Declined from 8% to 5% of total sales
  • Mahindra & Mahindra and Tata: Combined remained at 10% level
  • Exports: Improved from 2% to 3% of total sales

Capacity Utilization and Expansion

Current Capacity Status

CVJ (Constant Velocity Joint) Lines:

  • Line 1: 83% utilization
  • Line 2 (installed November 2025): 27% utilization with capacity of 370,000 units
  • Total CVJ sales: ₹1,300 million (65-67% of total capacity utilization)

MS Gear Lines:

  • Line 5 Dharuhera: 106% capacity utilization
  • Line 6: 21% utilization
  • Line 4 Chennai: Not yet operational (for export business)

CPS Lines:

  • Line 3 & 4 at Bawal: 50% utilization

New Projects and Launches

  • Supplying complete systems (MS Gear, CPS, CVJ) for Maruti Suzuki e-Vitara and Victoris
  • Additional ₹173-174 crores business from these new models
  • MPV EV from Maruti Suzuki Gujarat plant expected in October 2026 - company will supply complete systems
  • Honda SUV EV expected from Tapukara plant around December 2026 - potential ₹100 crores business

Export Developments

Brazil Order

  • First shipment to Brazil starting May 2026
  • Expected 70,000 units in current year
  • Potential to grow to 500,000 units annually
  • Utilizing Chennai manual gear line with installed capacity of 400,000 units
  • Business value could reach ₹50-60 crores next year

U.S. Exports

  • U.S. tariff reduced from 50% to 10% (withdrawn as per Supreme Court order)
  • Expected improvement in U.S. export profitability

Capital Expenditure and Financial Position

Capex Details

  • ₹800+ crores capex in last 3 years
  • Current CWIP: ₹411 crores
  • Gujarat plant commitment: ₹250 crores total, ₹112 crores already spent from rights issue proceeds
  • Expected FY27 capex: Approximately ₹100 crores for Gujarat plus normal capital expenditure

Return Metrics

  • Return on Capital Employed declined from 16% in FY24 to 10% in FY26
  • Fixed asset turnover declined from 4+ to 2.2
  • Improvement expected as new capacities utilize and CWIP reduces

Rights Issue

  • Successfully completed maiden rights issue
  • Full participation from promoters JTEKT Corporation Japan and Maruti Suzuki
  • Overwhelming public shareholder participation exceeding twice the shares offered
  • Rights issue expenses: ₹8.2 million

Future Outlook

Margin Improvement Drivers

  • Reduction in U.S. tariffs from 50% to 10%
  • Expected increase in U.S. exports
  • Reduced testing costs as new product development phases complete
  • Improved product mix with recovery in Honda sales
  • Brazil export business expansion

Growth Expectations

  • Capacity available to support ₹500 crores additional sales next year with market growth
  • CVJ business expected to reach ₹250 crores with 90% capacity utilization
  • Target to achieve 15% market share in CVJ segment
  • Fixed asset turnover target of 3x once capacities fully utilized

Management Participants

  • Mr. Yosuke Fujiwara - Whole-Time Director
  • Mr. Rajiv Chanana - Director
  • Mr. A. Dhanunjaya Rao - Technical Advisor, Part of MD Office
  • Mr. Ashish Singh - Divisional Head, Strategic Division
  • Mr. Vikas Goel - Chief Financial Officer